As highlighted in the Airlines and Airports Digital Services 2026 Market Insights report, global air passenger traffic continues to scale at an unprecedented pace, driven by rising middle-class populations, expanding international connectivity, and a strong recovery in leisure and business travel demand following the pandemic. In an environment characterized by margin volatility, shifting traveler expectations, and intensifying competition from digital-first travel ecosystems, airlines are increasingly reimagining themselves as modern retailers rather than transportation providers. The focus is rapidly shifting from selling seats to curating personalized, experience-led journeys spanning booking, ancillary services, airport experiences, loyalty ecosystems, and post-trip engagement. Therefore, airlines are modernizing their retailing experience by adopting the New Distribution Capability (NDC) framework introduced by the International Air Transport Association (IATA).
For decades, airline commerce was built around a standardized, seat-centric distribution model where fares were filed through Global Distribution Systems (GDS), inventory was managed through fixed booking classes, and customer interactions were largely transactional. While this model enabled scale and interoperability across the aviation ecosystem, it also commoditized the airline product and limited airlines’ ability to differentiate beyond price and schedule. However, evolving passenger expectations and the rise of digital-native commerce platforms are fundamentally reshaping this paradigm.
Nowadays, airlines are increasingly repositioning themselves as modern retailers, shifting from static inventory-led selling toward dynamic, customer-centric commerce models. The shift is governed by IATA’s Modern Airline Retailing (MAR) vision, supported by the “Offers and Orders” framework. This framework enables airline enterprises to dynamically create personalized offers based on customer profiles, preferences, and real-time demand signals, while managing fulfillments through a unified order structure rather than fragmented ticketing and reservation records. As enterprises accelerate retailing modernization initiatives, the limitations of legacy Passenger Service Systems (PSS) are becoming increasingly evident, as they were built around traditional ticketing logic, EDIFACT messaging, PNRs, and fixed fare classes. Hence, these systems lack the flexibility needed to support dynamic pricing, personalized offers, ancillary-led retailing, and integrated travel experiences, driving the industry’s transition toward next-generation commerce platforms. Therefore, airlines are modernizing their legacy systems by implementing modernized PSS from various industry-specific platform providers. Below are some of the airline examples using different airline retailing platforms.
Modern airline retailing is built on four key pillars that enable a more enhanced and personalized retail experience.
There are multiple factors that influence jet fuel prices, including crude oil price volatility, refinery capacity constraints, supply-demand imbalances, foreign exchange fluctuations, and geopolitical disruptions such as conflicts in the Middle East or supply bottlenecks in critical trade routes such as the Strait of Hormuz. In recent years, escalating geopolitical tensions have continued to push jet fuel prices upward, creating significant cost pressure on airlines globally. As fuel accounts for nearly 25%–30% of airline operating costs globally, rising jet fuel prices directly impact passenger ticket yield—the average revenue earned per passenger mile. To offset higher fuel expenses, airlines often increase fares, impose fuel surcharges, or optimize capacity, which can improve yield per ticket but may also weaken passenger demand over time.
As a result, airlines are increasingly adopting AI-driven dynamic pricing and continuous offer optimization capabilities to move beyond static fare structures toward personalized, context-aware pricing models based on traveler profile, intent, and purchasing behavior. This enables airlines to better protect margins during fuel volatility while unlocking incremental revenue growth opportunities through optimized fares and ancillary sales.
Ancillary services are rapidly emerging as a strategic lever for airlines to drive revenue growth as carriers seek to diversify beyond traditional ticket sales. With passenger ticket yields increasingly pressured by intense market competition, capacity expansion, and volatile fuel prices, airlines are accelerating monetization of non-ticket offerings such as baggage, seat upgrades, meals, lounge access, insurance, hospitality, and broader travel services. As digital commerce capabilities mature, ancillary revenues are evolving from supplementary income streams into core profitability drivers, enabling airlines to strengthen customer engagement while improving revenue resilience.
To maximize ancillary attachment rates, airlines are increasingly investing in AI-driven retailing, dynamic pricing, and modern offer management platforms that deliver real-time, personalized offers across the traveler journey. Rather than relying on static add-ons, carriers are leveraging traveler profiles, loyalty status, trip context, booking behavior, and willingness-to-pay signals to curate ancillary bundles tailored to individual customers dynamically. This includes personalized combinations of extra baggage, preferred seating, Wi-Fi, meals, priority boarding, lounge access, and sustainability-related offerings such as carbon offsets. Airlines are further extending these capabilities across omnichannel touchpoints, including airline websites, mobile applications, online travel agencies, and NDC-enabled distribution channels, to unlock incremental revenue opportunities.
Airlines are increasingly transforming their retailing architectures to deliver seamless and personalized offers across both direct and indirect sales channels. Historically, legacy PSS and GDS environments led to fragmented customer experiences, with ancillary products, dynamic pricing, and personalization capabilities inconsistently delivered across online travel agencies (OTAs) and corporate travel platforms. To address this, airlines are deploying centralized Offer Management Systems (OMSs) that dynamically create personalized fares, bundles, and ancillary offerings before distribution.
This transition is being accelerated by IATA’s NDC, which enables airlines to distribute rich, real-time offers across websites, OTAs, travel management companies (TMCs), and corporate booking ecosystems through API-driven connectivity. Airlines are further leveraging AI-driven pricing, dynamic bundling, and customer identity capabilities to improve offer consistency, strengthen ancillary monetization, and regain greater ownership of customer relationships across channels.
Looking ahead, airlines are evolving toward fully channel-agnostic, continuous pricing environments in which offers are dynamically optimized in real time based on traveler context, loyalty status, demand conditions, and booking behavior. This shift is expected to reposition airlines from traditional fare distributors to intelligent retailing platforms delivering highly personalized commerce experiences across the broader travel ecosystem.
Airlines are increasingly modernizing fragmented legacy technology environments to deliver seamless, connected, and digitally enabled traveler journeys across booking, servicing, operations, and post-trip engagement. This transformation is enabled by cloud-native microservice architectures, unified customer and order data models, real-time event streaming, and AI-driven automation capabilities. Airlines are increasingly leveraging cloud platforms, API-driven services, and machine learning models to enable proactive disruption management, automated rebooking, personalized servicing, and real-time traveler engagement across channels.
In the future, airlines are expected to evolve toward persistent, context-aware digital engagement models where customer interactions extend seamlessly across the entire travel life cycle. Accordingly, this enables airlines to proactively manage disruptions, personalize ancillary and loyalty offerings, automate servicing workflows, and strengthen long-term customer relationships through unified end-to-end journey visibility.
The core pillars of modern airline retailing can be achieved through adopting the NDC framework and implementing ONE Order and ONE Offer management technology platforms.
The core pillars of modern airline retailing require a strong, resilient foundation. Hence, airlines should adopt three IATA-led technology standards to serve as the foundational layers of modern airline retailing infrastructure.
Before the adoption of NDC, airlines relied on legacy GDS infrastructure built on EDIFACT standards, which were primarily designed to distribute fares and seat inventory. As airlines shifted toward ancillary-led revenue models, these systems became increasingly restrictive due to their inability to support dynamic pricing, personalized offers, bundled services, and rich content merchandising across indirect channels. Consequently, bookings made through OTAs and TMCs often displayed only base fares, preventing airlines from effectively monetizing ancillary products such as baggage, seat selection, lounge access, and upgrades. This created fragmented customer experiences across the airline’s direct and third-party channels, while also leading to substantial revenue leakage and limited visibility into customer behavior and purchasing preferences.
NDC addressed these challenges by replacing the rigid EDIFACT messaging framework with a modern XML-based API standard. Through NDC, airlines can distribute rich, dynamic, and personalized content across indirect sales channels in the same way they do on their own websites. Airlines can now offer real-time personalized pricing, ancillary services, bundles, loyalty-based offers, seat selection, and visual merchandising directly within OTA and TMC booking environments. This enabled indirect channels to become commercially equivalent to direct airline channels, significantly improving ancillary revenue opportunities and customer experience consistency. Additionally, NDC restored valuable customer and transaction data back to airlines, allowing them to better understand traveler behavior, optimize offers, strengthen loyalty engagement, and regain greater control over the retailing experience.
Therefore, airlines should view NDC not merely as a technology upgrade, but as a foundational enabler of modern airline retailing. Airlines should accelerate NDC adoption across both direct and indirect channels to ensure consistent, personalized, and content-rich customer experiences. They should integrate NDC with dynamic offer management, customer data platforms, loyalty systems, and AI-driven pricing engines to maximize ancillary revenue and improve conversion rates. Additionally, airlines should work collaboratively with OTAs, TMCs, and distribution partners to create seamless omnichannel retailing experiences while leveraging the customer insights generated through NDC transactions to improve personalization and revenue.
Historically, airline operations were built on fragmented architectures spanning reservation, ticketing, ancillary, loyalty, and departure control systems. A single passenger journey was often distributed across multiple disconnected records, including PNRs, e-tickets, Electronic Miscellaneous Documents (EMDs), loyalty transactions, and check-in records with limited real-time synchronization across systems. This fragmented operating model created significant inefficiencies during disruptions such as cancellations and rebookings, requiring agents to manually reconcile and update multiple records to reconstruct the passenger journey. The absence of a unified transaction view also contributed to ancillary revenue leakage, prolonged servicing timelines, reconciliation complexities, and inconsistent customer compensation handling. Additionally, airlines lacked an end-to-end view of the passenger journey, limiting their ability to deliver personalized servicing and proactive customer engagement.
ONE Order addresses these challenges by consolidating all passenger-related transactions into a single unified order record spanning flights, ancillaries, loyalty redemptions, and servicing interactions. It establishes a single source of truth that enables automated disruption management, real-time revenue reconciliation, simplified settlement processes, and seamless ancillary re-accommodation. In disruptions, airlines can automatically reconstruct and reissue passenger journeys, including associated ancillaries, without extensive manual intervention. This reduces operational overhead, accelerates recovery timelines, minimizes revenue leakage, and improves consistency in customer experience. Furthermore, the unified order construct provides airlines with a comprehensive view of the passenger life cycle, strengthening personalization, servicing intelligence, and future offer optimization capabilities.
Going forward, airlines should prioritize the transition from fragmented document-based architectures toward integrated order management ecosystems aligned with NDC, offer management, loyalty, servicing, and disruption management platforms. By leveraging a unified customer order model, airlines can simplify operations, improve real-time decision-making, reduce servicing costs, and build more resilient and customer-centric disruption management capabilities.
The airline pricing and merchandising models were built around Reservation Booking Designators (RBDs), which distributed fares through static booking classes with limited personalization. As a result, pricing decisions were primarily inventory-driven, with revenue managers adjusting seat availability across fare buckets based on demand forecasts rather than individual traveler behavior. This model lacked the ability to incorporate customer identity, loyalty status, purchase history, trip purpose, or ancillary preferences into pricing and offer construction. Additionally, airlines faced limited capabilities to dynamically bundle products such as seats, baggage, lounge access, and upgrades across indirect distribution channels. Also, ancillary cross-selling was largely generic and reactive, with the same offers presented to all travelers irrespective of their purchase propensity or preferences. As a result, airlines experienced significant revenue leakage from suboptimal pricing, low ancillary conversion rates, and the inability to effectively monetize personalized retailing opportunities across channels.
Offer management systems (OMS) helped airlines by enabling them to construct personalized, real-time offers based on a combination of customer, operational, and market data. OMS platforms ingest multiple data streams, including loyalty profiles, historical purchasing behavior, inventory availability, competitor pricing, channel context, demand forecasts, and AI/ML-driven propensity models, to dynamically generate tailored offers for individual travelers. This enables airlines to move from static inventory-based pricing toward customer-centric retailing, where pricing, upgrades, bundles, and ancillary recommendations are optimized in real time for each traveler. OMS also enables dynamic bundling and targeted ancillary merchandising across both direct and indirect channels through integration with NDC and modern retailing architectures, enabling airlines to enhance ancillary conversion rates and optimize yield management.
Going forward, airlines should prioritize deploying AI-enabled OMS as a core capability within their modern retailing strategy. They should integrate OMS platforms with NDC, ONE Order, loyalty ecosystems, and customer data platforms to enable dynamic pricing, personalized merchandising, and omnichannel offer orchestration.
Enterprise Case Studies: Modernizing Airline Retailing
The future of airline retailing is expected to be defined by the convergence of AI-driven personalization, intelligent automation, unified commerce architectures, and ecosystem-led travel experiences. As highlighted in Avasant’s Airlines and Airports Digital Services 2026 Market Insights report, airlines are rapidly transitioning from traditional seat-centric distribution models toward intelligent retailing enterprises focused on delivering seamless, experience-led journeys.
Going forward, airline commerce is expected to evolve toward an autonomous retailing model in which AI-based OMS systems dynamically construct, price, distribute, and service personalized offers in real time across channels. Globally, airlines are anticipated to increasingly leverage predictive analytics, machine learning, and contextual traveler intelligence to orchestrate individualized travel experiences spanning flights, ancillaries, loyalty benefits, airport services, hospitality, ground transportation, and third-party ecosystem offerings. This shift is expected to accelerate the emergence of continuous pricing environments where offers are dynamically optimized based on traveler behavior, loyalty status, trip intent, operational conditions, and market demand signals.
Simultaneously, the industry’s transition toward NDC, ONE Order, and modern Offer and Order management architectures is expected to fundamentally simplify airline commerce operations. The unified order ecosystems, cloud-native microservices, API-driven connectivity, and real-time event orchestration are likely to enable airlines to automate disruption management, servicing, settlement, and customer engagement workflows with minimal manual intervention. In parallel, digital identity frameworks, biometric-enabled journeys, and persistent customer profiles are anticipated to extend personalized and frictionless experiences beyond booking into airport operations, boarding, servicing, and post-trip engagement.
Additionally, airlines are also expected to evolve beyond traditional transportation providers into broader travel experience orchestrators operating within interconnected digital ecosystems. The integration of airlines with airports, hospitality providers, mobility platforms, fintech players, and loyalty ecosystems is likely to create unified commerce environments where travel experiences are dynamically assembled, fulfilled, and optimized end to end. As ancillary revenues continue to emerge as a critical profitability lever amid ongoing yield pressures and fuel price volatility, intelligent retailing capabilities will increasingly become a strategic differentiator for airlines globally.
Therefore, airlines should prioritize modernizing legacy Passenger Service Systems and fragmented retailing architectures by investing in AI-enabled OMS systems, NDC-enabled distribution, ONE Order ecosystems, customer data platforms, and cloud-native commerce infrastructure. Airlines that successfully establish unified, data-driven, and autonomous retailing capabilities will be better positioned to improve ancillary revenue, strengthen customer loyalty, enhance operational resilience, and deliver differentiated passenger experiences in an increasingly competitive, digitally connected aviation landscape.
By Amar Verma, Lead Analyst, and Sahaj Kumar, Research Director
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